Brexit discussion thread XIII (Please read OP before posting)

Strazdas

Nody wrote: »

Paperwork. Let's say I make a screw. I can now sell that to the EU single market without any tariffs or quotas which is great; however I now need to prove to the EU that the screw I'm selling actually meets EU regulation and requirements. That means I need to show how it's made, the materials in it, how well it holds up to pressure, weather & wind etc. to meet the EU regulation. And all of these needs to be proven in an EU approved facility with EU approved methods and that's not going into areas such as state aid, fair competition etc. which is requirements for EU as well.

Then when I export my screws to EU and the truck arrives at the border I need to have all the paperwork to prove those screws sent now matches the tests done before with them and they will most likely take samples to test (amount of sampling depends on country and type of goods) it before they are allowed to go past the border. I also may need to declare to the UK exactly what I'm exporting, then ensure the appropriate taxes (not to be confused with tariffs) are applied and paid on them as well as part of the import (you pay the taxes at the border or show proof of payment not to be confused with VAT which is paid at the receiver side). If the taxes are not paid the screws are not allowed to leave the border post (and this can delay trucks for days or even weeks...).

Now here comes the real kicker in all of this; these days you rarely send one truck with one type of goods. So if you send 10 different screws in the truck you need 10 different sets of paper works, proof of payments etc. to go with them. Miss any of them and the whole truck stops up until it's fixed. And if you then want to change the material in one of the screws because of a new supplier? Well that's back to retest it all again before they are allowed to be sent over again etc.

So while zero tariffs and quotas is a nice start the real killer in a FTA is in the mutual recognition etc. clauses. That is what will really unlock the potential in a deal rather than the tariffs and quotas in general.

Goodness knows what this will do to UK-EU trade. Most of the Brexiteers are economically illiterate and have never imported or exported anything in their lives - they cannot even begin to contemplate what mayhem they are bringing down on their country.

This is one hell of an 'experiment'. A country voluntarily ripping up all its trade deals and withdrawing from economic union with its neighbours.

Leroy42

Nody wrote: »

Paperwork. Let's say I make a .....

Cheers for that.

fash

Shelga wrote: »

See this is what I don't understand. If they have tariff-free and quota-free access, what else is there to the single market and customs union? If they can send as much as they want of any product, with no tariffs?

Sorry if this is a stupid question, I just still find trade very complex. But at least the 17.4 million Leave voters knew exactly what they were voting for, so I'm sure it will all be fine.

It's the 50k customs officials and what they represent that's the issue - plus the restrictions on people and services.

fash

Nody wrote: »

Paperwork. Let's say I make a screw. I can now sell that to the EU single market without any tariffs or quotas which is great; however I now need to prove to the EU that the screw I'm selling actually meets EU regulation and requirements. That means I need to show how it's made, the materials in it, how well it holds up to pressure, weather & wind etc. to meet the EU regulation. And all of these needs to be proven in an EU approved facility with EU approved methods and that's not going into areas such as state aid, fair competition etc. which is requirements for EU as well.

Then when I export my screws to EU and the truck arrives at the border I need to have all the paperwork to prove those screws sent now matches the tests done before with them and they will most likely take samples to test (amount of sampling depends on country and type of goods) it before they are allowed to go past the border. I also may need to declare to the UK exactly what I'm exporting, then ensure the appropriate taxes (not to be confused with tariffs) are applied and paid on them as well as part of the import (you pay the taxes at the border or show proof of payment not to be confused with VAT which is paid at the receiver side). If the taxes are not paid the screws are not allowed to leave the border post (and this can delay trucks for days or even weeks...).

Now here comes the real kicker in all of this; these days you rarely send one truck with one type of goods. So if you send 10 different screws in the truck you need 10 different sets of paper works, proof of payments etc. to go with them. Miss any of them and the whole truck stops up until it's fixed. And if you then want to change the material in one of the screws because of a new supplier? Well that's back to retest it all again before they are allowed to be sent over again etc.

So while zero tariffs and quotas is a nice start the real killer in a FTA is in the mutual recognition etc. clauses. That is what will really unlock the potential in a deal rather than the tariffs and quotas in general.

Plus don't forget rules of origin problems. You can have a zero tariff/zero quota FTA, and still be have to pay tariffs because to high a percentage of your good consists of products not from your state but from other states. EU turned the UK's ambitious position on this down.

Geuze

Nody wrote: »

So while zero tariffs and quotas is a nice start the real killer in a FTA is in the mutual recognition etc. clauses. That is what will really unlock the potential in a deal rather than the tariffs and quotas in general.

Yes, in most sectors, the NTB non-tariff barriers are more serious, and more of an issue/challenge, than the tariffs.

(Agriculture/food is the exception)

McGiver

Nody wrote:

Then when I export my screws to EU and the truck arrives at the border I need to have all the paperwork to prove those screws sent now matches the tests done before with them and they will most likely take samples to test (amount of sampling depends on country and type of goods) it before they are allowed to go past the border. I also may need to declare to the UK exactly what I'm exporting, then ensure the appropriate taxes (not to be confused with tariffs) are applied and paid on them as well as part of the import (you pay the taxes at the border or show proof of payment not to be confused with VAT which is paid at the receiver side). If the taxes are not paid the screws are not allowed to leave the border post (and this can delay trucks for days or even weeks...).

Hang on.

So every single shipment of goods has papers checked, that I'd expect, but how much of it is checked/tested for compliance? Every single shipment? Certain % only?

And the EEA countries don't need to show papers when importing to the EU, I presume? And their shipments are never checked/tested for compliance?

Nody

McGiver wrote: »

Hang on.

So every single shipment of goods has papers checked, that I'd expect, but how much of it is checked/tested for compliance? Every single shipment? Certain % only?

It's down to the combination of goods type & country; for example NZ lamb has a 1 or 2% check rate; default rate for lamb would be around 70% because NZ routines, rules and vets etc. have been verified by EU. This is why it's so important to go on the 3rd party country list as well (which UK still has not applied for iirc) because that's basically EU evaluating how well they can trust a country outside of EU (Regulation (EC) No 882/2004 (Article 23)).

And the EEA countries don't need to show papers when importing to the EU, I presume? And their shipments are never checked/tested for compliance?

EEA countries do need to show some paperwork but it's usually duty related (i.e. if you move goods in/out of Switzerland there are certain duties to be paid etc.) but it's a much smoother flow and they don't random sample check the goods.

Lumen

Trying to lay aside issues of incompetence and idiocy in the current administration since that may be a short term issue, I still don't understand the vision of what the UK is supposed to become.

They're too big to be a tax haven and too small to be a populous superpower with economies of scale associated with a massive domestic market (China, USA). They don't have the raw materials of Australia. They don't have the "efficiency" of India or Vietnam.

So putting aside all the understandable pessimism, and assuming that international market forces and its flexible labour market will produce something productive out of this, what does the most positive picture of a properly independent UK look like?

looksee

'Sunlit uplands with unicorns?'

Sorry, but its like asking 'name one good thing about Donald Trump, sometimes you just can't. Maybe if they get a genius leader who takes them in a direction that we can't see yet, some new technology, or a bit of financial wizardry that no-one has thought of before, in a few years they may be doing well. I hope they do. But I am not seeing it.

Sam Russell

McGiver wrote: »

Hang on.

So every single shipment of goods has papers checked, that I'd expect, but how much of it is checked/tested for compliance? Every single shipment? Certain % only?

And the EEA countries don't need to show papers when importing to the EU, I presume? And their shipments are never checked/tested for compliance?

The EU uses internal market surveillance to make sure that all is well. The example of this was the sudden detection of horse meat in burgers, detected in Dublin, that were the result of horse meat becoming beef on its journey from Hungary, via Belgium and a few other places, on its way into a meat producer in Ireland. Now horse meat is OK to eat, just not if you are told its beef.

As a result of the UK leaving the EU, SPS inspections in Larne rise from a 10% rate to a 100% rate until confidence rises to the current level. That requires the EU to be satisfied that sufficient veterinary oversight occurs in production. This involves inspections and undertakings the EU rules will be followed, such as GMO and antibiotic use comply.

The certifications the EU require are quite extensive, and the UK currently complies (mostly), but from 1st Jan 2021 they need to use EU approved certification bodies, and the current UK approved bodies lose their EU certification. It is a bit like insurance, it runs out on 1st Jan.

How vigorous the inspections will be in January, we have yet to see, but they will get more thorough as the months go by if the no-deal happens.

Professor Moriarty

Sam Russell wrote: »

The EU uses internal market surveillance to make sure that all is well. The example of this was the sudden detection of horse meat in burgers, detected in Dublin, that were the result of horse meat becoming beef on its journey from Hungary, via Belgium and a few other places, on its way into a meat producer in Ireland. Now horse meat is OK to eat, just not if you are told its beef.

As a result of the UK leaving the EU, SPS inspections in Larne rise from a 10% rate to a 100% rate until confidence rises to the current level. That requires the EU to be satisfied that sufficient veterinary oversight occurs in production. This involves inspections and undertakings the EU rules will be followed, such as GMO and antibiotic use comply.

The certifications the EU require are quite extensive, and the UK currently complies (mostly), but from 1st Jan 2021 they need to use EU approved certification bodies, and the current UK approved bodies lose their EU certification. It is a bit like insurance, it runs out on 1st Jan.

How vigorous the inspections will be in January, we have yet to see, but they will get more thorough as the months go by if the no-deal happens.

Of course rigorous inspection is a two-way street. Our food exports to the UK may come under intense scrutiny in retaliation. Which may be self-defeating for the UK but it will be a tactic that Brexiteers will gleefully employ.

Hermy

Lumen wrote: »

...a properly independent UK look like?

What do you mean by a properly independent UK?

Lumen

looksee wrote: »

'Sunlit uplands with unicorns?'

Sorry, but its like asking 'name one good thing about Donald Trump, sometimes you just can't. Maybe if they get a genius leader who takes them in a direction that we can't see yet, some new technology, or a bit of financial wizardry that no-one has thought of before, in a few years they may be doing well. I hope they do. But I am not seeing it.

Some things appear disastrous in the short term but can lead to long term prosperity.

For instance: from what I recall of the UK's ERM exit, it was universallly characterised at the time as an utter disaster, but sitting outside the Eurozone has proven unexpectedly positive.

Other examples: Japan and Germany losing the second world wars, albeit we don't have a counterfactual.

It still seems most likely to me that the UK will end up being negotiated into a position of dependence on the EU rather that independence from it; a rule taker rather than a rule maker. They won't like it, and perhaps they'll develop a kind of North Korean attitude towards the EU, of powerless hatred. But at least they won't be spitting in the soup because they won't be at the table.

But I just can't shake the feeling that I'm suffering from a failure to imagine the ultimate outcome, because nobody has ever attempted something so stupid there are no useful examples to look at.

Lumen

Hermy wrote: »

What do you mean by a properly independent UK?

I'm not really sure. I suppose I mean a sort of mini-China.

murphaph

Professor Moriarty wrote: »

Of course rigorous inspection is a two-way street. Our food exports to the UK may come under intense scrutiny in retaliation. Which may be self-defeating for the UK but it will be a tactic that Brexiteers will gleefully employ.

They might but they need our food or at least somebody else's food as they only produce 2/3 of what they eat. The EU doesn't need to import any food from outside. It is entirely self sufficient if needs be.

The UK would also be on shaky ground if it starts treating EU food imports worse than other 3rd countries without being able to demonstrate why before a WTO tribunal.

Professor Moriarty

murphaph wrote: »

They might but they need our food or at least somebody else's food as they only produce 2/3 of what they eat. The EU doesn't need to import any food from outside. It is entirely self sufficient if needs be.

The UK would also be on shaky ground if it starts treating EU food imports worse than other 3rd countries without being able to demonstrate why before a WTO tribunal.

Well, that's why I said it might be self-defeating. But I wouldn't put anything past this bunch of populists. My point was in relation to the suggestion that the EU might ramp up inspections to put the squeeze on the UK in the months after a No Deal crash out. In that scenario, angry Brexiteers will lash out in any way possible. These nationalist clowns are so full of hubris, they're capable of anything.

Hermy

Lumen wrote: »

I'm not really sure. I suppose I mean a sort of mini-China.

But are they not already - indeed, have they not always been - a properly independent country?

Sam Russell

Professor Moriarty wrote: »

Well, that's why I said it might be self-defeating. But I wouldn't put anything past this bunch of populists. My point was in relation to the suggestion that the EU might ramp up inspections to put the squeeze on the UK in the months after a No Deal crash out. In that scenario, angry Brexiteers will lash out in any way possible. These nationalist clowns are so full of hubris, they're capable of anything.

Well, they could retaliate by closing the M2 and M20 - that'll teach them. Wait - wont the Kent motorways be closed anyway with trucks queueing to get to Dover? OK, they could check all those EU motor parts coming into the UK from the EU for certificates of origin documents - that'll teach them - but wait - Nissan, Jag/LR Toyota and Honda all have shutdown production lines waiting for those parts. Not such a good idea, but we have another plan - what is it Gove?

They'll have to rub out those ideas and start again.

Professor Moriarty

Sam Russell wrote: »

Well, they could retaliate by closing the M2 and M20 - that'll teach them. Wait - wont the Kent motorways be closed anyway with trucks queueing to get to Dover? OK, they could check all those EU motor parts coming into the UK from the EU for certificates of origin documents - that'll teach them - but wait - Nissan, Jag/LR Toyota and Honda all have shutdown production lines waiting for those parts. Not such a good idea, but we have another plan - what is it Gove?

They'll have to rub out those ideas and start again.

But would you put it past them to intensify inspection of imports from Ireland in retaliation to intensified inspection of their exports to the EU? I wouldn't.

fash

Lumen wrote: »

Trying to lay aside issues of incompetence and idiocy in the current administration since that may be a short term issue, I still don't understand the vision of what the UK is supposed to become.

They're too big to be a tax haven and too small to be a populous superpower with economies of scale associated with a massive domestic market (China, USA). They don't have the raw materials of Australia. They don't have the "efficiency" of India or Vietnam.

So putting aside all the understandable pessimism, and assuming that international market forces and its flexible labour market will produce something productive out of this, what does the most positive picture of a properly independent UK look like?

Requesting to join the EU for slow learners?

Capt'n Midnight

Lumen wrote: »

I'm not really sure. I suppose I mean a sort of mini-China.

China has raw materials and factories and cheap labour and doesn't rely on imports.

The UK would be a little closer to Hoxha's Albania.

Yes the UK has niche manufacturing and research and services and those will do well because there's always room at the top.

But they won't win the race to the bottom.

How many foreign owned car plants will win the internal competition to build the next model when a plant in Turkey or Japan doesn't face 10% on most of it's output in an industry where a marque like VW is trying to increase margins from 4% back to 6%.

Even if they devalue sterling and reduce workers pay and rights or in other words even if they try to finance competitivity from workers life savings and assets.

CelticRambler

Sam Russell wrote: »

As a result of the UK leaving the EU, SPS inspections in Larne rise from a 10% rate to a 100% rate until confidence rises to the current level. That requires the EU to be satisfied that sufficient veterinary oversight occurs in production. This involves inspections and undertakings the EU rules will be followed, such as GMO and antibiotic use comply.

And, oops: guess what? The UK has a desperate shortage of veterinary surgeons, especially those prepared to work in meat factories, so for more than a decade they have relied on - yes, you have guessed it - vets trained in Mediterranean and Eastern Europe to get British meat onto British supermarket shelves. That's why veterinary inspectors has been added to the growing list of unfillable vacancies in Brexit Britain.

Sam Russell

Lumen wrote: »

Some things appear disastrous in the short term but can lead to long term prosperity.

<snip>

But I just can't shake the feeling that I'm suffering from a failure to imagine the ultimate outcome, because nobody has ever attempted something so stupid there are no useful examples to look at.

Well look at Germany post war - West Germany.

In the early 60s, if you converted GB£10,000 into DMs, today that would be worth approx €50,000.

The Germans hate inflation, and when the UK suffered 20% and more inflation in the seventies, Germany did not. When Thatcher sold off the council houses cheap and refused to build anymore, the result was a continued housing shortage that forced houses to be on an ever upward price spiral to the delight of home owners, but disaster for the homeless and needy.

German cars were valued for their quality and value. UK car manufacturers (well BL) were universally reviled for the rubbish crap they produced - think of the Metro or Marina. It was not until the Japanese arrived has the car production recovered - first Toyota and then Nissan. The British currently are major purchasers of German cars (well BMW, Mercedes, and VW - they don't get Opels because they are Vauxhalls produced in Luton).

So where must they go now?

Well, manufacturing is now mostly China or east Europe or Turkey, so forget that.

Well how about financial services?
Well, that is going well, but they need the passporting, and that requires a deal with the EU, but that has been ruled out, so forget that.

How about cheese?
Yea that sounds good - Truss likes cheese- they have just signed a trade deal with Japan allows them to export Stilton to Japan - only problem is that the Japanese do not eat blue chees - but it is a triumph of negotiation - the rest of the deal is the same as the EU negotiated deal.

Now what else is left?

Not much. Money laundering, they are already pretty good at that. Selling arms - they are quite good at that. Building cheap houses that are guaranteed to go up in price - yea that might work. (We tried that and it did not work out that well but they would be better at it). Maybe they could try producing lots of cake they could eat.

They could of course agree to a deep and close deal with the EU. Should be easy to do such a deal. Surely.

We will see.

Professor Moriarty

Sam Russell wrote: »

Well look at Germany post war - West Germany.

In the early 60s, if you converted GB£10,000 into DMs, today that would be worth approx €50,000.

The Germans hate inflation, and when the UK suffered 20% and more inflation in the seventies, Germany did not. When Thatcher sold off the council houses cheap and refused to build anymore, the result was a continued housing shortage that forced houses to be on an ever upward price spiral to the delight of home owners, but disaster for the homeless and needy.

German cars were valued for their quality and value. UK car manufacturers (well BL) were universally reviled for the rubbish crap they produced - think of the Metro or Marina. It was not until the Japanese arrived has the car production recovered - first Toyota and then Nissan. The British currently are major purchasers of German cars (well BMW, Mercedes, and VW - they don't get Opels because they are Vauxhalls produced in Luton).

So where must they go now?

Well, manufacturing is now mostly China or east Europe or Turkey, so forget that.

Well how about financial services?
Well, that is going well, but they need the passporting, and that requires a deal with the EU, but that has been ruled out, so forget that.

How about cheese?
Yea that sounds good - Truss likes cheese- they have just signed a trade deal with Japan allows them to export Stilton to Japan - only problem is that the Japanese do not eat blue chees - but it is a triumph of negotiation - the rest of the deal is the same as the EU negotiated deal.

Now what else is left?

Not much. Money laundering, they are already pretty good at that. Selling arms - they are quite good at that. Building cheap houses that are guaranteed to go up in price - yea that might work. (We tried that and it did not work out that well but they would be better at it). Maybe they could try producing lots of cake they could eat.

They could of course agree to a deep and close deal with the EU. Should be easy to do such a deal. Surely.

We will see.

Japan has an extremely high rate of lactose intolerance.

Professor Moriarty

correct horse battery staple wrote: »

They can then explain to angry electorate why food shelves are empty because we are imposing more beuracracy, which is funny as Brexit was sold as way to cut on red tape

It wos the EU wot done it.

View

Lumen wrote: »

Some things appear disastrous in the short term but can lead to long term prosperity.

For instance: from what I recall of the UK's ERM exit, it was universallly characterised at the time as an utter disaster, but sitting outside the Eurozone has proven unexpectedly positive.

Other examples: Japan and Germany losing the second world wars, albeit we don't have a counterfactual.

It still seems most likely to me that the UK will end up being negotiated into a position of dependence on the EU rather that independence from it; a rule taker rather than a rule maker. They won't like it, and perhaps they'll develop a kind of North Korean attitude towards the EU, of powerless hatred. But at least they won't be spitting in the soup because they won't be at the table.

But I just can't shake the feeling that I'm suffering from a failure to imagine the ultimate outcome, because nobody has ever attempted something so stupid there are no useful examples to look at.

BIB - There is no evidence that “sitting outside the Eurozone” proved beneficial to the U.K.

The reality is that it is Sterling that has slowly but consistently lost value against the Euro, not the other way round, since the latter’s inception in 1999.

In addition, even with the constant ongoing devaluation, the U.K. has still managed to run increasing trade deficits with the rest of the EU countries, which is particularly ironic since it was their “unsustainable trade deficit” with the rest of the EU countries that supposedly made their position in the ERM untenable back then.

View

Professor Moriarty wrote: »

Japan has an extremely high rate of lactose intolerance.

Even were that not the case, the reality is that cheese is rarely, if ever, exported halfway around the globe.

Even if you walk into the best cheese shop you can find here, they just don’t stock cheese from the further away EU/EEA countries, never mind cheese from the Middle East or South America, much less from Japan. I very much doubt that the cheese shops in Japan are stocking much cheese from far flung countries of the globe when they can source it in Japan or its immediate Asian neighbours.

Strazdas

View wrote: »

BIB - There is no evidence that “sitting outside the Eurozone” proved beneficial to the U.K.

The reality is that it is Sterling that has slowly but consistently lost value against the Euro, not the other way round, since the latter’s inception in 1999.

In addition, even with the constant ongoing devaluation, the U.K. has still managed to run increasing trade deficits with the rest of the EU countries, which is particularly ironic since it was their “unsustainable trade deficit” with the rest of the EU countries that supposedly made their position in the ERM untenable back then.

It's actually a commonly accepted urban myth among the Brexiteers / Europhobes that membership of the Eurozone would have damaged the UK. They never even question this or challenge it. Economists think in reality that the UK would have taken a slightly bigger hit during the financial crash but that the Euro could have been beneficial at other times.

But with their obsession with 'sovereignty', they would of course have withdrawn from the currency as soon as Brexit happened.

Sam Russell

Professor Moriarty wrote: »

Japan has an extremely high rate of lactose intolerance.

They also have a high rate of genetic intolerance to alcohol.

[Not relevant to this, but indicative to local and cultural differences. In that part of the world they drink tea, not beer].

Lumen

Strazdas wrote: »

But with their obsession with 'sovereignty', they would of course have withdrawn from the currency as soon as Brexit happened.

From what I've read, membership of the Euro would have almost certainly prevented Brexit, since Brexit would have resulted in an uhsustainable foreign-denominated debt or default (or equivalent to default, like unilateral redenomination).

This was discussed a fair bit by nerds during the run up to the Scottish independence referendum.